Adjournment Debate - Fiscal Policy.

Wednesday, 11 March 2009

Dáil Eireann Debate
Vol. 677 No. 4

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Deputy James Bannon: Information on James Bannon  Zoom on James Bannon  I thank the Ceann Comhairle for affording me time to address this important matter, namely the views of the Minister for Finance on the desirability of all sections of the public service, including the Judiciary, developing policies and plans for cost-saving measures in the current economic climate. The need to bring this matter before the House is driven by the series of knee-jerk reactions by the Government in response to the financial downturn, which totally lack cohesion, and by public concern at the perceived inequity.

[821]The remedial actions currently taken by the Government lack equity as they bypass the upper levels, including the President and the Judiciary, and leave the lower and middle income sectors to bear the brunt of the Government’s pension levy. I have already raised under Standing Order 32 the issue of the exemption of judges from the payment of the pension levy. Although this exemption appears to be justified under Article 35 of Bunreacht na hÉireann, it is open to debate. Such a levy could be said to be a form of taxation and the imposition of same may not in fact contravene the constitutional safeguard of remuneration, as judges do pay tax. The pension levy has created a social divide which will not be bridged easily. Judges are entitled to quote Article 35 of Bunreacht na hÉireann with regard to their remuneration. However, the Constitution was never meant to be a veil for the Judiciary or anyone else. It must be guarded and nobody should hide behind it. The Judiciary and the Government would be well advised to focus on the preamble of the Constitution which places the power firmly in the hands of the people.

As members of the Judiciary well know, no one is above the law. Likewise, in these extraordinary times no one should be above making sacrifices for the well-being of their country. If nothing else, noblesse oblige should impel our judges to make a voluntary contribution. It is a question of perspective. Why should those who are struggling to make ends meet see the Judiciary, who are at the top of the public service payscale, escaping the payment of this levy?

The Minister chose to ignore calls from the Opposition not to include an exemption for the Judiciary in the Financial Emergency Measures in the Public Interest Act which introduced the pension levy, thus enshrining it in law. I am puzzled as to why this had to be and why he chose to copper-fasten the exemption. Article 36 of Bunreacht na hÉireann allows the regulation of matters pertaining to judges, including remuneration and pensions, in accordance with the law, which is where a fresh look at this issue of the pension levy legislation could have made a difference.

The term “remuneration”, in general as well as in the context of employment law, covers more than salary and includes any benefits which are conferred on an employee in the course of his or her employment. Nonetheless, it is still within the Minister’s gift to turn his attention to cost cutting measures in the Judiciary under section 8(3) of the Court Services Act 1998, which states that “the Service shall, if so requested by the Minister, furnish to the Minister such information as the Minister may request relating to a number of matters.” This subsection envisages the provision of information other than, or in addition to, that contained in the annual report. In this context, the Minister may request information in respect of any or all of the categories listed in the subsection.

I am calling on the Minister to seek parity for low and middle income earners by requesting the Judiciary to furnish details of cost-cutting measures in line with those of other public sector workers.

Minister of State at the Department of Health and Children (Deputy Mary Wallace): Information on Mary Wallace  Zoom on Mary Wallace  I am speaking in this debate on behalf of the Minister for Finance, and I thank the Deputy for raising this issue.

The drive to secure savings and efficiencies across all areas of the public service is now well advanced, and this process has been under way for some considerable time. Even before the full extent of this unprecedented downturn in public finances became apparent, the Government was publicly committed to an ongoing programme of streamlining public expenditure. In his 2008 budget statement, the then Tánaiste and Minister for Finance, Deputy Brian Cowen, announced an efficiency review of all administrative spending across the whole public service. The Minister indicated that particular areas of interest included possible inefficiencies due to [822]the multiplicity of boards and agencies, the need for better sharing of certain services, and efficiencies in management, travel and consumables in general.

In July 2008, his successor as Minister for Finance, Deputy Brian Lenihan, announced a range of efficiency and savings measures, including those identified as a result of the budget day efficiency review. Among the other measures were a reduction in the payroll bill of 3% for all Departments, State agencies and local authorities, other than health and education, by the end of 2009; a significant reduction in expenditure on consultancies, advertising and public relations by Departments and agencies in 2008 and a minimum 50% decrease in 2009. The above measures were designed to minimise the effects on users of services in the areas of health, education and social welfare and were estimated to deliver savings of €440 million in 2008 and €1 billion in 2009.

In addition to the above savings, the Minister instigated a review of agencies to determine whether they could share services, whether it would be appropriate to absorb some of their functions back into their parent Departments, or whether some agencies should be amalgamated or abolished. In the 2009 budget, the Minister for Finance announced 30 rationalisation decisions that will reduce the number of State agencies by 41. At the moment, nine of the 30 rationalisation decisions have been implemented, covering nine State agencies and the closure of the four Army barracks. Legislation to give effect to the remaining decisions is in preparation.

The continued fall in economic activity entering 2009 has meant that, even with these savings, the fiscal position has continued to deteriorate, which led the Government to announce further measures in February. These further savings are estimated to achieve up to €1.8 billion in 2009 or €2 billion in a full year. While further efficiency and capital savings were announced, the main element of this package of measures was the introduction of public service pension-related deduction. The principle behind the public service pension-related deduction is that it should apply across the public service. This is based on the need to reduce the public service pay bill and is also in recognition of the pension benefits enjoyed by public servants.

One category to which the deduction does not apply is the Judiciary. Our Constitution is quite clear on this. Article 35.5 expressly states, “The remuneration of a judge shall not be reduced during his continuance in office.” We have legal advice confirming that the pension-related deduction should not be applied to the Judiciary. Of course, the pension-related deduction is not the only action that the Government has taken to contain and reduce public service pay costs. The increases under the review and transitional agreement for 2008-09 are not being paid, which will lead to further savings of up to €1 billion next year.

The measures outlined above show the determination of the Government to restore balance to the public finances in the face of a continued international economic slowdown. The Taoiseach today announced the Government’s intention to present a supplementary budget to the House on April 7. This supplementary budget will continue the process of adjustment begun by the earlier savings measures, as this is the only way to ensure the future fiscal stability and economic prosperity of this country.

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